Frequently Asked Questions: leasing FAQs

Car leasing 101: What you need to know before you sign on the dotted line

Car leasing doesn’t have to feel like navigating a maze blindfolded.

Whether you’re a first-timer or you’ve been around the block a few times, we’ve gathered the most frequently asked questions we get here at Carparison to help you navigate what can be, admittedly, quite a confusing world.

Can’t find what you’re looking for?

Our leasing consultants are always at the end of the phone to help – no question is too big or too small. Unless you’ve got big, burning questions about astrophysics. Or Egyptology. Or really anything that isn’t car leasing.

But car leasing? Yeah. We’ve got that one nailed.

Can I take my lease car abroad?

Absolutely!

Pack your passport and hit the road – just bear in mind there’s a bit more to sort out than just checking your insurance.

Get your paperwork sorted: You’ll need your full UK photocard driving licence, and if you’ve still got an old paper licence, you might need an International Driving Permit (IDP) too.

Since your finance provider keeps the V5C logbook, you’ll need to contact your funder at least two weeks before you travel to get permission and the right documents. They’ll give you a VE103 certificate and a VE103B document (the Vehicle on Hire certificate that acts like a temporary V5C).

You might be charged a small fee for these documents, but it’s a small price to pay to get abroad.

Check your cover: Make sure your insurance extends abroad – some insurers reduce your cover to basic levels when you cross borders. The same goes for breakdown cover, so just double check to make sure you’re happy with everything.

Watch your mileage: Don’t forget that European adventure will eat into your annual mileage allowance. If you’re planning an epic road trip, factor this into your mileage estimate to avoid excess charges down the line.

Do you pay road tax on lease cars?

Road tax, or Vehicle Excise Duty (VED), is included for the full term on all contract hire agreements. We’ve got you covered, so you can take one thing off your bulging to do list, and forget about those annual reminder letters.

But here’s what’s changed this year.

Road tax rates went up across the board in April, which affected electric car drivers the most.

After years of enjoying VED-free motoring, EVs have joined the tax club. Electric cars registered after April 1 2025 will pay £10 in their first year, and then £195 from year two onwards.

If your EV costs over £40,000, you’ll also get hit with the expensive car supplement – an additional £410 per year.

Petrol, diesel and hybrids haven’t escaped the tax rises either. The higher your car’s C02 emissions, the more you’ll pay.

Since we include road tax in your monthly payments, you won’t see any surprise bills (providing VED doesn’t rise again in the coming years). However, there have been some increases in lease prices to reflect the new rates, especially for those vehicles hit with the expensive car supplement.

If there are any changes during your lease, you’ll be kept informed of these, and if you have anything extra to pay.

How will I know when my lease car is due for an MOT?

Your car will need its first MOT when it hits three years old.

If you’ve leased a brand-new car on a three-year deal, you should be able to return it before the MOT is due – one less appointment to worry about.

Bear in mind that if your car is pre-registered (ie, the car has already been registered directly to a dealership, broker or leasing company, which is often done to secure a better rate), then the MOT date might fall within that three-year period.

You’ll still be driving around in a brand-new car, but because the MOT is due three years from registration date, it could be before you hand the car back.

And, of course, if your contract is longer than three years, you’ll need to factor in getting that MOT done.

What happens if I get a parking or speeding fine on my lease car?

The finance company will get the fine first (because they’re the registered owner), but they’ll pass it straight on to you.

Unfortunately, you can’t escape those pesky parking tickets.

The same goes for congestion charge fines, so keep an eye out for Clean Air Zones and Low/Ultra Low Emission Zones when you’re out and about.

How old do I need to be to lease a car?

You’ll need to be over 18 to lease with most funders, though some might have slightly different age requirements.

If you’re just scraping past the minimum age, don’t fret. Phone our lovely team instead, and they can talk you through your options.

What do I do about car insurance for a lease car?

You’ll need to sort out your own insurance, and it needs to be in place before your shiny new lease car arrives on your driveway.

Shop around for the best deal, but make sure the cover is comprehensive – third-party only won’t cut it with most lease agreements.

What happens if I get into a collision with my lease car?

It’s the usual drill – if there are any incidents, collision or otherwise, with your lease car, then you’ll need to contact your insurer as soon as it’s safe to do so.

Your insurance will handle the claim, just like they would if you’d bought the car.

The key thing is to make sure that your cover is comprehensive, so you’re not left out of pocket if anything goes wrong.

What are the rules on smoking in a lease car?

You can smoke in your lease car, but here’s why you might want to think twice about actually smoking in it.

Though there aren’t technically any rules against it, long-term exposure to cigarette smoke can cause interior deterioration that goes beyond fair wear and tear, and any cigarette burns on the upholstery will need repairing – both of which could mean forking out extra cash at the end of your lease.

There’s also the law to consider: smoking is prohibited in any vehicle if there’s someone under 18 present.

Vaping is also allowed in lease cars, but you’ll need to be careful. The dense vapour can temporarily obscure your view of the road, and the device itself can be a distraction.

If a police officer thinks you can’t see clearly or you’re likely to be distracted, you could face a fine and up to nine penalty points on your licence.

The bottom line?

Whether it’s cigarettes or vapes, anything that affects your driving or damages the car could cost you more than it’s worth.

Is there a mileage limit on lease cars?

You’ll choose your annual mileage limit when you take out your lease contract, which can be between 5,000 and 30,000 miles per year.

Your monthly payment will reflect your chosen mileage allowance. The more miles you need, the higher the cost.

If you go over your agreed mileage, you’ll pay excess charges based on pence per mile (it’ll all be outlined in your paperwork). It pays to be careful, and really sit down and work out how far you drive – on average – every year.

What are the rules on pets in lease cars?

Your furry friends are more than welcome along for the ride. (And if you have pictures, we’d love to see them.)

Just make sure they’re safely secured and that the car doesn’t come back to your funder looking (or smelling) like a mobile petting zoo.

A good set of seat covers could save you a lot of hassle come return time.

What if I want to end my lease contract early?

Early termination is possible, but it’s rarely the most wallet-friendly option.

There will be additional charges involved, so it’s worth speaking to your funder first to understand exactly what you’d be looking at.

Life happens, and sometimes circumstances can change. Just make sure you know the financial implications before you make any decisions.

What is fair wear and tear?

Fair wear and tear covers the normal scuffs, scrapes, and general deterioration that comes from actually using your car and not bundling it up in bubble wrap.

The British Vehicle Rental and Leasing Association (BVRLA) Fair Wear and Tear Guide sets the industry standard for what’s acceptable when you return your lease car. It takes into account the car’s age and mileage, covering everything from windows and paintwork to interior upholstery and tyres.

The key word here is ‘normal’.

We’re talking about the kind of wear you’d expect from everyday driving, not damage from misuse, neglect or accidents.

Any damage beyond the BVRLA guidelines will likely result in charges from your funder. Getting repairs done yourself beforehand is usually more cost-effective than letting the funder sort it out after collection.

Do I have to replace tyres when leasing a car?

Yes, it’s your responsibility to keep your tyres legal and safe.

If you’ve opted for a maintenance package that includes tyre replacement, you’re sorted – and won’t have to worry about scrabbling down the back of the sofa for some change if your car needs its tyres changed.

When it comes to handing the car back, tread requirements will vary by funder, so just make sure you’ve checked with them before collection day.

Still got questions?

We’ve got an extensive range of guides covering every aspect of vehicle leasing, from the basics right through to the nitty-gritty details.

And if you’re still scratching your head about something, our team is always happy to help.

After all, putting the ‘ease’ in your next car lease is what we’re here for.